My novel deals with this in a small way: a mind control device. Not sure if it fits your criteria though. Been mulling it. For me, loss of personal control is very horrifying. But my novels tend to be more action adventure than horror.

I think lack of personal control is truly horrifying! But at the moment I'm thinking of looking specifically at the mechanical aesthetics. Though I think I can see more places in which bio-engineering (or similar) is present (e.g. The Island of Dr Moroue, Jeckll and Hyde - though I know these aren't strictly steampunk).

I thought that might be your emphasis. I keep feeling like I read about some stories like this, but not sure where. I read a straight SFR called Mech Man, but its not steampunk. There was a Carina Press title, I think, about a guy who had a mechanical arm, from losing an arm in the war. Some of the romantic steampunk stories mix in paranormal elements, so it muddies the mechanical stuff a bit.

Bernard Wolfe's Limbo '90, written in the '50s. More SF than SP, wherein men willingly undergo amputation to obtain the increased strength and dexterity of cybernetic limbs - paralleled in the 1960s in the TV show Dr Who with the Cybermen.

I wonder about the links with modern day technology. It seems that the next big step for our nano technologies is for them to become integrated with our bodies (Google in your head, iPods in your ears etc). Perhaps by using the horror and clanky aesthetics of industrial technologies (future technologies, with past mechanisms), it serves as something of a warning; a visual repulsion to mechanical fusion.

That is, if it IS represented as horror. The flip-side is that it is represented as awesomeness.

To answer your question of why it's so dominant, I feel S-punk is, in the main, an optimistic setting. A better or different technology to correct what ails us in body, ecology, transportation, mundane tasks. Prosthetics make us better people by giving us better bodies.

On the other hand, mechanical or not, tech can also provide us the foil wherein we explore the justice of a mechanised age or the disconnect we suffer as we embrace the social changes inherent in the evolution of Homo mechanicus.

Can't forget the Strange Case of Dr. Jeckyll and Mr. Hyde. I'd put Kafka's The Metamorphosis in this category (as well as adding that it is possibly the most autobiographical story ever written) though it is not in that era.

Body modification, body replacement, and transhuman bodies are fertile ground for sci fi particularly because there is a mix of fascination and horror at the concept. Some people react with revulsion at the notion of their body being changed, while others are taken in by the idea that their brain is the only meaningful part (and that only in so much as their thought process and identity remains uninterrupted).

I think part of the horror aspect of Victorian era body modification comes from the perception of it being barbaric, performed without antiseptics or anesthesia. A modern knee replacement surgery is more extensive than some of the things described in horror, but it evokes none of the same feelings. We don't refer (except jokingly) to people with joint replacement or heart pacemakers as cyborgs or part machine.

It was also an era of quack medicine and where science was primarily dissection, observation, and documentation with a heaping of conjecture piled on top. So that provides equally fertile ground for writers and artists to take what was a crackpot theory of the time and say "what if it were true?"

Another connection worth noting if you are studying the topic of body horror is the anecdotal connection between body replacement fantasy and transgender people. Many, before acknowledging their feelings, were drawn to stories and settings that featured body replacement. Where many folks find challenges to body integrity frightening, for a transsexual person, it can be a fitting solution to a very real problem they face.

And I would be remiss if I didn't mention my new project Parts here: http://mechanomorphosis.tumblr.com It's a journal format story about a professor who is transforming his body into a mechanical android part by part.